Oil & Gas
Shifts in natural gas exploring highlights renewed interest in West Africa
In the recent past, political unrest and widespread violence in West Africa region constrained the development of productive gas sectors and resulted in a decreased risk appetite among foreign investors.
A cursory look at the region shows that countries in the past exported liquefied natural gas (LNG), with trade primarily based on long-term sales agreements. However, in the last decade, natural gas has become a globally-traded commodity with new exporters from West Africa.
West Africa, a region already noted for its healthy crude reserves, has gained increasing attention from natural gas players and is set to cash in on this interest.
According to the US Geological Survey’s recent World Oil and Gas Assessment, West Africa’s coast, which covers areas including Liberia, Sierra Leone, and Guinea, is home to an estimated 3.2 billion barrels of oil, 23.63 trillion cubic feet of natural gas, and 721 million barrels of natural gas liquids.
Natural gas exploration into regions such as this is not the result of a knee-jerk reaction.
Industry close watchers are of the view that the reason behind shifts in exploring fundamentals, can be traced to the high crude prices which serve as incentive for producers to invest in exploration and production projects. This to them is becoming more economical for companies to go “deeper and to go riskier.”
According to some analysts, intensified natural gas exploration initiatives are already being undertaken in Ghana as the government seeks new ways to counter diminishing oil production following the discovery of the Jubilee field in the deepwater Tano Block.
Market report shows that greater focus on natural gas production and refining in recent years has opened new export markets and generated additional revenues for West African economies.
To further deepen the investment shift, World Bank has committed to build upon the completion of the West African Gas Pipeline (WAGP) project, which has enabled the supply of Nigerian gas to Benin, Togo, and Ghana.
The pipeline system has a capacity of 800 million standard cubic feet per day (MMscfd), and will initially carry a volume of 170 MMscfd before peaking at 460 MMscfd.
The pipeline was a significant step in relation to the transportation of gas for export, as well as for use within the region. It links into the existing Escravos-Lagos pipeline at the Nigerian Gas Company‘s Itoki Natural Gas Export Terminal and proceeds to a beachhead in Lagos. From there it moves offshore to Takoradi, Ghana, with gas delivery laterals from the main line extending to Cotonou (Benin), Lome (Togo), and Tema (Ghana).
Industry operators are however concerned that despite this gas boost, West Africa still poses unique challenges, including low availability of refining capacity, adequate logistical infrastructure, and transportation. It is hoped that with an increase in revenue on the back of this exploration, some of these challenges will be overcome.
The development of LNG refining capacity within West African states particularly Equatorial Guinea, Cameroon, and Nigeria is indicative of the future development of the region’s natural gas export market.
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